Trump Signs Executive Order on Drug Pricing

President Donald Trump signed an Executive Order today aimed at significantly reducing prescription drug prices in the United States through a 'most-favored nation' policy. This approach would align American drug prices with the lowest international prices available, potentially resulting in price cuts ranging from 30% to 80%. Trump specifically highlighted an expected reduction of 59% in a recent social media post.

Despite this ambitious announcement, details regarding how this policy will be implemented remain unclear, leading to significant uncertainty among investors. Following Trump's statement, pharmaceutical stocks experienced considerable declines across the U.S., European, and Asian markets.

Medicare and Medicaid, accounting for roughly 40% of the U.S. pharmaceutical market, could see substantial impacts from these price reductions, potentially decreasing pharmaceutical revenues significantly. Trump has emphasized the fairness of this policy, arguing that Americans currently subsidize drug costs globally.

The administration plans to outline specific drug price targets within 30 days following the executive order's issuance, expecting pharmaceutical companies to achieve significant progress toward lower prices within six months. Additionally, the executive order will explore the potential for direct-to-consumer purchasing programs at international price levels, expanding possible reforms beyond the Medicare framework. 

Stay informed about the regulatory and legal implications through SHALL—our legal database for commercial compliance in the pharmaceutical industry—which provides real-time updates on changes as they occur.